June 14 (Bloomberg) -- Australia’s retail “gloom” may be
starting to recede after the central bank slashed the benchmark
interest rate by 1.25 percentage points over the past eight
months, a Deloitte Access Economics report showed.

“Those cuts will free up a substantial chunk of disposable
income,” the Canberra-based research company said in a report
released today. Government spending measures including payments
for school-age children and extra welfare spending may also
provide a “sugar hit” to the retail industry, it said.

Ebbing consumer confidence and declining prices prompted
Myer Holdings Ltd., the country’s largest listed department
store company, to forecast a 15 percent decline in net income in
the year through July. Australian households are saving money at
more than twice the rate of their U.S. counterparts. In nine of
the past 12 months, pessimists have outnumbered optimists in
Westpac Banking Corp. surveys.

“Overall, we expect that interest-rate cuts and budget
handouts will help the retail sector continue some upward
momentum in the coming months,” the report showed. “Real wages
growth is picking up, which may also help sustain retail growth
at a reasonable level over 2012 and into 2013.”

Deloitte said risks to its forecast remain high, as threats
to the global economy keep business and consumer confidence
fragile and because of wealth losses due to weaker share markets
and house prices.